Spill report rekindles Democratic push for reform

Democrats in Congress said Tuesday they would try to rekindle legislation to improve regulation of offshore drilling and raise the $75 million liability cap on oil companies for spills — ...

WASHINGTON – Democrats in Congress said Tuesday they would try to rekindle legislation to improve regulation of offshore drilling and raise the $75 million liability cap on oil companies for spills — steps a presidential panel says are necessary to prevent another catastrophic blowout.

The seven-member panel unanimously endorsed 15 recommendations to the oil industry, Congress and the Obama administration for preventing another large-scale oil spill. Most will require action by Congress, but some could be done through rulemaking, primarily at the Interior Department, commissioners said.

Democrats immediately used the 380-page report to jumpstart legislative efforts that failed after last year's oil spill, the largest offshore incident in U.S. history. They will face an even tougher road to passage this year, with a Republican majority in the House of Representatives set on cutting spending and reducing the government's regulation of business. In addition, already higher-than-normal gasoline prices are prompting calls for more domestic energy production.

Congress "must take action this year to prevent another catastrophic spill through smart regulation, and by giving regulators the tools and resources they need to do their jobs effectively," Senate Majority Leader Harry Reid said. He endorsed raising the liability caps on oil companies, which BP waived after the Gulf disaster, "to ensure that taxpayers are never again on the hook for the damages caused by BP or any other oil company's missteps."

The Democratic-controlled House approved bills last year to boost safety standards for offshore drilling and remove the liability cap, but the measures were not taken up in the Senate. Those bills included many of the suggestions recommended by the commission Tuesday after wrapping up a six-month investigation requested by President Barack Obama.

Rep. Edward J. Markey, a Massachusetts Democrat and the ranking member on the House Natural Resources Committee, said the report should bring Republicans on board for greater regulation. He said he would introduce legislation to carry out many of the panel's recommendations.

Rep. Doc Hastings, a Washington Republican who leads the natural resources panel, said some proposals "deserve real consideration." But domestic oil and gas production needs to be expanded to combat rising gasoline prices, he said. "Reforms should accomplish our shared goals of improving safety, allowing drilling to move forward in a timely manner, and putting people back to work," he said.

The 380-page report also calls for increasing budgets and training for the federal agency that regulates offshore drilling; dedicating 80 percent of fines and penalties from the BP spill to restoration of the Gulf; and lending more weight to scientific opinions by other federal scientists in drilling decisions.

When asked about the likelihood Congress would enact some of its suggestions, panel co-chair and former Florida Democratic Senator Bob Graham said that the magnitude of the disaster "would override an ideological preference for less government, less government intrusion, less government cost."

"This is not a typical example of government regulation of a private enterprise," Graham said. "Drilling offshore is a privilege to be earned, not a right to be exercised by private corporations." If the recommendations are not carried out, he warned, "the probability of another failure will be dramatically greater."

The panel said Congress should draft legislation to create within the Interior Department an independent safety agency and a separate environmental office to evaluate the risks of oil drilling to natural resources. The commissioners said the change would fully separate the agency's regulation of oil companies from its job of collecting revenue from oil produced and land leased offshore.

Panel co-chair William K. Reilly, a former Environmental Protection Agency administrator, said the current separation fails to ensure that revenue doesn't drive decisions at the agency.

U.S. regulations for offshore drilling should be at least as stringent as those in other oil-producing nations and require oil companies to adopt safety procedures common elsewhere but lacking in the Gulf, the panel added.

In a statement, Interior Secretary Ken Salazar suggested he was receptive to some of the commission's suggestions. He said his department already has adopted several "key reforms" proposed by the report, and that officials would consult its findings to improve oversight further.

The panel also called for an industry-led safety institute, similar to the one created by nuclear power producers after the 1979 Three Mile Island accident.

The American Petroleum Institute, which lobbies on behalf of 400 oil and gas companies, said it is working on an industry safety program. It also praised the panel for recommending more funding for the Bureau of Ocean Energy Management.

But Erik Milito, an institute director, said the report went too far in casting doubt on the safety culture of the entire industry. It also failed to recognize steps already taken to make drilling safer, he said.

Calls to BP, Halliburton and Transocean for comment were not immediately returned. Last week, the commission said management failures at the three companies led to the blowout and explosion that killed 11 workers and released more than 200 million gallons of oil from the damaged well.

Since then, the oil industry and government have taken numerous steps in an effort to improve safety.